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Sunday, September 25, 2011

Labour abandon students (again)!

After lining up behind student protests against the UK Government's increase in university tuition fees and making much political capital out of it, Ed Miliband and the Labour Party finally came up with their own policy last night.

Effectively it amounts to 'you were right to raise fees, but just not by that much.' It is a slogan designed to get students back onto the streets, except they may not look so kindly on the Labour Party this time.

What is worse is that the badly thought-through compromise by the Labour leader does nothing for poorer students but, in fact helps richer graduates and those from a more privileged background. New Labour is not dead after all.

My position has not changed on this. I am opposed to tuition fees and if I had had a vote I would have joined my Welsh Liberal Democrat colleagues in opposing the imposition of a top rate of £9,000. I understand that the party itself was not in a position to fulfil its election promise because it did not have a majority in the House of Commons for that point of view, but individual MPs did have a duty to stick with their individual pledges and that is what Mark Williams, Jenny Willott and Roger Williams did.

Interestingly the Miliband position underlines the Liberal Democrats' problem. The Tories were certainly not going to support us in opposing an increase. It is now clear that Labour would not have backed us either. They wanted to double fees. And let us not forget that Labour were the first party to break election pledges on tuition fees. Twice in fact. They introduced the fees and then brought in top-up fees in defiance of two manifesto pledges. And in their case they had a choice because they did have a Commons majority.

As Sara Bedford points out the latest Labour policy u-turn is a far cry from Ed Miliband's commitment to a graduate tax, which has now disappeared from his website. She continues:

There are three reasons why even the increase in maximum fees to £6,000 rather than £9,000 will make very little or no difference to those prospective students Ed seeks to beguile.

Firstly, the change is likely to benefit only two groups of people: those whose parents can afford to pay the fees up front and those who will earn a high salary, but not quite enough to pay the higher rate of interest which will be ‘asked’ of those earning over £65,000 (can they therefore say no?).

Following on from this point, as money expert Martin Lewis explains succinctly, monthly repayments are the same whether fees are £6,000 or £9,000.

Finally, tuition fees are only a small part of the costs of studying for a degree and the only one that doesn’t have to be paid immediately. The NUS estimate that the cost of living during term time for an undergraduate student for the last academic year, excluding tuition fees, was £12,233. This doesn’t include living costs during the holidays. A prospective undergraduate is far more likely to be deterred by having to find those costs from a combination of loans, part-time work, parental help and grants if lucky, than they are to be encouraged by removing a sum of money from a putative future debt, which they are never likely to have to pay anyway.

John Hemming MP has a useful take on the Mili-u-turn as well:

The news that Labour support the increase in tuition fees to 6K at the lower end, but not the higher end to 9k is an odd piece of news.

Basically under the coalition scheme the graduates in the bottom half of earnings are not affected by this proposal. Those who would benefit are those who earn in their life time more than the 52nd percentile.

In fact many of these would hardly be affected (those at the bottom end) and it is the higher earners that really benefit, but not the top earners.

This is an interesting political placing. We are trying to benefit lower earning households. Labour are trying to benefit the upper middle earning households.

The point is that the system as introduced by the UK Coalition Government is designed to help poorer students by enabling them to defer or to avoid repayment of the tuition fee grant altogether. As Graeme Cowie points out, all that Labour has done is to make it easier for richer students to repay the loan earlier and thus pay less. This is because the funding system is effectively a kind of graduate tax, so Labour are advocating a tax cut on the richest beneficiaries of an English University education:

And of course, this poses the question of where the Universities are going to plug the hole in the finances this creates? Are we to expect more direct state funding? Where is that coming from without increasing the deficit? "Tax the banks" Labour reply. Well here's the thing. Your bonus tax raised absolute pittance compared with the Coalition's banking levy. Just like with the very tuition fees you promised you would never introduce, you command no credibility for delivery.

Essentially, Ed Miliband's change is no change at all.

Update: George Potter points out that this is Labour's seventh tuition fees policy in 14 years:

1997 - Labour manifesto promises not to introduce fees.
1998 - Labour introduces tuition fees.
2001 - Labour manifesto promises not to increase fees.
2003 - Labour more than doubles tuition fees.
2010, May - Labour enters the election having commissioned the Browne review and committing themselves to support it's recommendations (widely predicted to be unlimited tuition fees).
2010, December - Tuition fees raised to a maximum of £9,000 after Browne review recommends unlimited fees. Ed Miliband states that Labour party policy is to replace fees with a graduate tax.
2011 - Ed Miliband announces that Labour party policy is to support a cap of £6,000.

The last part of the post is crucial - and of course, the question about how universities are supposed to plug the funding gap created by the politics of tuition fees is not going to be addressed properly - as usual.

Looks as if Miliband was hellbent on making English universities go through the same problems we are seeing here in Wales, thanks to the short-sighted (but vote-grabbing) policies of the Labour Assembly Government, which has been perfectly happy to 'invest' a part of its higher education budget into buying votes for itself - to the detriment of those young people who'd actually like to get a good degree in Wales.

In the end, we are in this mess because tuition fees were introduced in the first place: this means that university funding will forever be in the hands of politicians who will, of course, be concerned about voters' views on fees (too high) while having absolutely no incentive to understand how one creates a really thriving university sector (most certainly not by underfunding and over-regulation).

It's why I am ultimately for abolishing tuition fees, but I'd rather not see any unrealistic promises in this regard ever again. It's not going to be easy.
The latest spin I heard was that the graduate tax is still an aspiration and that the £6,000 tuition fee cap is a short-term measure.
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